Chapter 9 - Purpose of budgets. The main contents of this chapter include all of the following: Purpose of budgets, behavioral aspects of budgeting, advantages arising out of staff participation, factors affecting behaviour. | Chapter 9 Purpose of budgets 9- Purpose of budgets Planning: Necessitates setting of goals and establishing actions needed to attain goals. Organising: Involves the allocation of resources. Leading: Two main aspects are communicating & motivating. Controlling: Process of setting standards, measuring current performance and taking remedial action if needed. 9- Behavioral aspects of budgeting To maintain supportive and cooperative relationships with staff. The use of punishment (authoritarian style) tends to encourage attempts to ‘beat the system’. Padding the budget means overestimating costs and/or underestimating revenue. Participation in the budgetary process tends to result increased productivity and satisfaction. 9- Advantages arising out of staff participation Improved communication. Greater understanding of what is involved. Opportunity to thrash out problems. Increased acceptance. Improved commitment. 9- Factors affecting behaviour Targets perceived by . | Chapter 9 Purpose of budgets 9- Purpose of budgets Planning: Necessitates setting of goals and establishing actions needed to attain goals. Organising: Involves the allocation of resources. Leading: Two main aspects are communicating & motivating. Controlling: Process of setting standards, measuring current performance and taking remedial action if needed. 9- Behavioral aspects of budgeting To maintain supportive and cooperative relationships with staff. The use of punishment (authoritarian style) tends to encourage attempts to ‘beat the system’. Padding the budget means overestimating costs and/or underestimating revenue. Participation in the budgetary process tends to result increased productivity and satisfaction. 9- Advantages arising out of staff participation Improved communication. Greater understanding of what is involved. Opportunity to thrash out problems. Increased acceptance. Improved commitment. 9- Factors affecting behaviour Targets perceived by employees as being too difficult. Targets that do not provide any challenge. Insufficient flexibility. Narrow-minded managers. Emphasis on financial goals to the detriment of non-financial goals. 9- | Chapter 9 Purpose of budgets 9- Purpose of budgets Planning: Necessitates setting of goals and establishing actions needed to attain goals. Organising: Involves the allocation of resources. Leading: Two main aspects are communicating & motivating. Controlling: Process of setting standards, measuring current performance and taking remedial action if needed. 9- Behavioral aspects of budgeting To maintain supportive and cooperative relationships with staff. The use of punishment (authoritarian style) tends to encourage attempts to ‘beat the system’. Padding the budget means overestimating costs and/or underestimating revenue. Participation in the budgetary process tends to result increased productivity and satisfaction. 9- Advantages arising out of staff participation Improved communication. Greater understanding of what is involved. Opportunity to thrash out problems. Increased acceptance. Improved commitment. 9- Factors affecting behaviour Targets perceived by employees as being too difficult. Targets that do not provide any challenge. Insufficient flexibility. Narrow-minded managers. Emphasis on financial goals to the detriment of non-financial goals. .
